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Thursday, 02 September 2010 00:00
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Cash transfers are the only solution to a PDS that doesn't work

The Supreme Court’s order, in the PUCL case on corruption in the Food Corporation of India, telling the government to distribute foodgrain free instead of allowing it to rot in godowns is curious. It is intuitively appealing since there is no sense in letting grain rot, or letting rats eat it as Arundhati Roy famously said, while there are people starving or at least malnourished. The order, however, is almost impossible to implement and also runs contrary to the view taken by the courts on so many occasions — we will not intervene in policy matters unless there is some mala fide. While the agriculture minister has said he will implement the order, he would do well to read it carefully since it could well come back to haunt both him and the government.

But first, a larger point. It is well known the government mismanages the food economy — it didn’t offload stocks as it should have earlier this year when prices were rising unchecked, it allows the foodgrains to rot, it has stocks well above the buffer levels, it then sells them at a loss to exporters in order to clear the godowns for the new crop, the list goes on. But here’s the problem. If the government was capable of meeting the SC’s directions, we wouldn’t even have been in this situation today. If the government was in a position to ensure the PDS worked, that it had enough PDS outlets, most of the grain procured would have been distributed. The PDS is bust, so the grain has to rot. Nor can the government plan how much is excess and how much will rot. It cannot, it simply has no idea — offtake of wheat and rice from the PDS, for all schemes, rose from 41.4 million tonnes in 2004-05 to 42.1 million tonnes and then fell to 39.5 million tonnes in 2008-09. Logically, the procurement should have fallen — it has, however, risen from 41.6 million tonnes in 2004-05 to 55.5 million tonnes in 2008-09.

The FCI, the court has said, must “procure only that much foodgrains which can be properly preserved”. No one can object to that. But as long as the government is bound to buy stocks at the support price, it just has to buy the grain — how do you stop this? Ideally, the FCI should have its own godowns, but we know that isn’t happening and the system of getting outside agencies to store foodgrains, the court says, “should end forthwith” since the Justice Wadhwa report of Orissa had identified this as “one of the main thrusts of diversion of PDS foodgrains”. Again, some numbers will help. Against the procurement of 55 million tonnes in 2008-09, FCI’s total capacity to store was just 25.3 million tonnes. If this isn’t bad enough, FCI’s own capacity is just 15.1 million tonnes. Obviously the food is going to rot, and if the hired space is done away with, things will get even worse. Is the government willing to accept an eminently sensible, but politically infeasible, solution of fixing the delivery system before putting more into it?

One wonders if the agriculture minister, or anyone else in authority, has a view on the court’s direction on how to tackle bogus PDS cards — presumably the same thing applies to NREGA cards and so on. After citing a newspaper report saying there are 250,000 bogus cards in Orissa alone, the court says, “By a newspaper advertisement, a warning be issued asking all the bogus card-holders to surrender the bogus cards forthwith, in any event within two weeks of the date of advertisement, otherwise criminal prosecution may be initiated against the bogus card-holders. We have to develop a culture of zero tolerance towards corruption.” Since the next hearing on the matter has been set for 2 pm on September 6, it would be interesting to see the government’s response to what the court feels is a relatively easy job — just requires some political will, that’s all.

This, of course, is a lesson to all those in the government and its conscience keepers in the NAC. Since the plan seems to be to legislate more rights — right to education, right to food, right to work, right to vote Congress (in the works?), perhaps even the right to happiness (as Surjit Bhalla says) — the question to be asked is how the government plans to deal with the effects of it not being able to deliver. Right now, it may still be possible to appeal the SC order, but once the right to universal access to foodgrains (a hot topic of debate within the NAC) comes about, there is no escape. The thought of getting into contempt situations on a regular basis should send a chill up the collective spine of the bureaucracy.

It also highlights the essential contradiction in government policy in UPA-II. If more LPG connections are to be given, especially to the poor, how come the number of kerosene card-holders isn’t coming down? If more people are to be covered under NREGA and get a minimum wage, why is the PDS coverage rising and why are we having a debate on universalising PDS — if they have the money, why can’t they buy the food?

The solution, of course, has been staring us in the face for several years now: cash transfers. Now that the UIDAI is close to becoming a reality, why not just transfer cash to people, forget job guarantees that don’t develop infrastructure or subsidised food in the PDS. Link the UIDAI’s fingerprints to bank accounts and transfer the funds.

The larger point, of course, is that of a collapse in governance. Once there’s a vacuum, someone steps in — the army in the case of Pakistan and, as we’ve seen in the PDS case in India, the judiciary. With increasing cases of corruption, we’re just one step away from the courts looking at contracts. Chew on that.



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